Correlation Between Automobile and Dong Il
Can any of the company-specific risk be diversified away by investing in both Automobile and Dong Il at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Automobile and Dong Il into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Automobile Pc and Dong Il Steel, you can compare the effects of market volatilities on Automobile and Dong Il and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Automobile with a short position of Dong Il. Check out your portfolio center. Please also check ongoing floating volatility patterns of Automobile and Dong Il.
Diversification Opportunities for Automobile and Dong Il
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Automobile and Dong is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Automobile Pc and Dong Il Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong Il Steel and Automobile is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Automobile Pc are associated (or correlated) with Dong Il. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong Il Steel has no effect on the direction of Automobile i.e., Automobile and Dong Il go up and down completely randomly.
Pair Corralation between Automobile and Dong Il
Assuming the 90 days trading horizon Automobile Pc is expected to generate 1.3 times more return on investment than Dong Il. However, Automobile is 1.3 times more volatile than Dong Il Steel. It trades about -0.02 of its potential returns per unit of risk. Dong Il Steel is currently generating about -0.13 per unit of risk. If you would invest 71,700 in Automobile Pc on September 3, 2024 and sell it today you would lose (3,700) from holding Automobile Pc or give up 5.16% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Automobile Pc vs. Dong Il Steel
Performance |
| Timeline |
| Automobile Pc |
| Dong Il Steel |
Automobile and Dong Il Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Automobile and Dong Il
The main advantage of trading using opposite Automobile and Dong Il positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Automobile position performs unexpectedly, Dong Il can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dong Il will offset losses from the drop in Dong Il's long position.| Automobile vs. Korea Real Estate | Automobile vs. Busan Industrial Co | Automobile vs. UNISEM Co | Automobile vs. RPBio Inc |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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